Owens v. National Health Corp.

263 S.W.3d 876, 2008 Tenn. LEXIS 29, 2007 WL 3284669
CourtTennessee Supreme Court
DecidedFebruary 7, 2008
DocketM2005-01272-SC-R11-CV
StatusPublished
Cited by67 cases

This text of 263 S.W.3d 876 (Owens v. National Health Corp.) is published on Counsel Stack Legal Research, covering Tennessee Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Owens v. National Health Corp., 263 S.W.3d 876, 2008 Tenn. LEXIS 29, 2007 WL 3284669 (Tenn. 2008).

Opinions

JANICE M. HOLDER, J.,

delivered the opinion of the court,

in which WILLIAM M. BARKER, C.J., and CORNELIA A. CLARK and GARY R. WADE, JJ., joined.

In this appeal, the primary issue is whether a durable power of attorney for health care authorized the attorney-in-fact to enter into an arbitration agreement as part of a contract admitting the principal to a nursing home and thereby to waive the principal’s right to trial by jury. The case also presents secondary issues relating to the arbitration agreement, including whether this case is governed by the Tennessee Uniform Arbitration Act or the Federal Arbitration Act. We hold that the arbitration agreement is to be interpreted pursuant to the Tennessee Uniform Arbitration Act and that the power of attorney authorized the attorney-in-fact to enter into the arbitration agreement on behalf of the principal. In addition, we reject the plaintiffs arguments that: 1) the arbitration agreement is unenforceable because a material term of the agreement is incapable of performance; 2) the arbitration agreement violates federal law; and 3) pre-dispute arbitration agreements in nursing-home contracts violate public policy. However, we remand the case to the trial court for further proceedings on the question of whether the arbitration agreement is an unconscionable, and thus unenforceable, contract of adhesion.

OPINION

FACTS AND PROCEDURAL HISTORY

On August 5, 2003, Mary Francis King (“King”) executed a Durable Power of Attorney for Health Care (“the power of attorney”) naming Gwyn C. Daniel (“Daniel”) and William T. Daniel as King’s attorneys-in-fact. The power of attorney authorized the attorneys-in-fact “to ASSIST me in making health care decisions, and to make health care decision [sic] for me if I am incapacitated or otherwise unable to make such decisions for myself.” The power of attorney then set out two paragraphs that are based substantially upon similar provisions in the statutory form for a living will. See Tenn.Code Ann. § 32-11-105 (2001). Those two paragraphs provide directions to King’s attorneys-in-fact concerning her care in the event she were to have “a terminal condition, or be in an irreversible coma or permanent vegetative state.”1

The power of attorney further provided:

[880]*880At any time, my Attorney-in-Fact shall have the right to examine my medical records and to consent to their disclosure whether I am incapacitated or not. I grant to my Attorney-in-Fact the power and authority to execute on my behalf any waiver, release or other document which may be necessary in order to implement the health care decisions that this instrument authorizes my Attorney-in-Fact to assist me to make, or to make on my behalf.
This instrument is to be construed and interpreted as a Durable Power of Attorney for Health Care and is intended to comply in all respects with the provisions of Tennessee Code Annotated, § 34-6-201 et seqand all terms used in this instrument shall have the meanings set forth for such terms in the statute, unless otherwise specifically defined herein.

On August 26, 2003, three weeks after executing the power of attorney, King was admitted to NHC Healthcare, Murfrees-boro, a nursing home owned, operated, and managed by the various defendants. The Admission and Financial Contract listed “Gwen [sic] Daniel” as “Legal Representative” and indicated that the “Type” of legal representative was “Power of Attorney.” The contract was signed by Daniel and by John Willie Smith (“Smith”), King’s brother. Smith is not named in the power of attorney, and no other document in the record authorizes him to make decisions on behalf of his sister.

Section H of the eleven-page contract is entitled “DISPUTE RESOLUTION PROCEDURE (WHICH INCLUDES JURY TRIAL WAIVER).” Section H, which is one-and-one-half pages long, contains three numbered provisions. Section H(l) sets out an “INITIAL GRIEVANCE PROCEDURE” and states that “[t]he parties agree to follow the Grievance procedures described in the Patient Rights Booklet for any claim, controversy, dispute or disagreement arising out of or in connection with the care rendered to Patient by Center and/or its employees.” Section H(2) is entitled “MEDIATION AT PATIENT’S REQUEST,” and it provides that the patient may request mediation of “any claim, controversy, dispute or disagreement arising out of or relating to ... this contract or breach thereof or any tort claim.” The mediation provision further provides that “[f]ailure by the Patient to request or pursue mediation prior to activation of the arbitration process shall terminate Patient’s right to mediation.”

Section H(3) of the contract is entitled “BINDING ARBITRATION.” This section of the contract provides, in pertinent part:

BINDING ARBITRATION: Any claim, controversy, dispute or disagreement initiated by either party prior to written notice of mediation, shall be resolved by binding arbitration administered by either the American Arbitration Association (AAA) or the American Health Lawyers Association (AHLA), as selected by the party requesting arbitration. In the event that the selected arbitration service is unwilling or unable to serve as arbitrator, the other named service shall [881]*881be utilized. The judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
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This agreement for binding arbitration shall be governed by and interpreted in accordance with the laws of the state where the Center is licensed....
BY AGREEING TO ARBITRATION OF ALL DISPUTES, BOTH PARTIES ARE WAIVING A JURY TRIAL FOR ALL CONTRACT, TORT, STATUTORY, AND OTHER CLAIMS.

Section H concludes with a separate signature box containing the following text:

I hereby agree to the arbitration provisions described above in Section H, including the use where applicable of the AAA Defined “Consumer-Related Disputes.” The provisions of Section H have been explained to me prior to my signature below and I also understand that I waive my right to trial by jury.

Following that text are signature lines for “Patient Signature” (left blank in this contract), “Legal Representative Signature” (signed by Daniel), “Additional Signature (if applicable)” (signed by Smith), and “Date” (written as “8/26/03”).

The last section of the contract, Section L (“ACKNOWLEDGEMENT” [sic]), is followed by a signature line for a representative of the nursing home and signature lines for the patient and “Other Persons Signing on Behalf of Patient.” The patient’s signature line on King’s contract was left blank, and Daniel and Smith signed on the two signature lines provided for “Other Persons Signing on Behalf of Patient.”

On February 10, 2005, Dorothy Owens (“the plaintiff”), as conservator of King, filed suit against National Health Corporation d/b/a NHC Healthcare, Murfreesboro; National Healthcorp, L.P.; National Health Realty, Inc.; NHC, Inc. a/k/a NHC, Inc.-Tennessee; and NHC/OP, L.P. (collectively, “the defendants”). The complaint alleges that King suffered injuries as the result of the acts or omissions of the defendants while a patient in the nursing home.

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Cite This Page — Counsel Stack

Bluebook (online)
263 S.W.3d 876, 2008 Tenn. LEXIS 29, 2007 WL 3284669, Counsel Stack Legal Research, https://law.counselstack.com/opinion/owens-v-national-health-corp-tenn-2008.